Renowned economist worried"Steve Hanke, a veteran economist and applied economics professor at Johns Hopkins University, said there are two significant problems in the US economy and markets that are keeping him from getting a good night's sleep. One is inflation, which he thinks could start to spiral out of the Fed's control".
The other is high stock prices, which will start crashing back to earth, he told Business Insider.I don't know if Hanke is right. But he's not alone. Several publications have sounded the alarm.
The GuardianThe Motley FoolAxios / OECD
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What can possibly be wrong.
What can possibly be wrong”.
The linked video is brief, comprising the opening minutes of the final 1999 episode of popular and widely acclaimed Wall Street Week With Louis Rukeyser. Lou was an outspoken bull having recently dismissed Gail Dudack from a key program role due to her bearish views. The 4 "experts" on the esteemed panel, including a much younger Liz Ann Saunders, all forecast that 2000 would be another banner year for stocks. We know what ensued 2-3 months later ...
Stocks got clobbered. The NASDAQ peaked at 5048.62 in March 10, 2000 and bottomed at 1114.11 in October 2002. It took about 15 years for it to return to the 2000 high.
"The NASDAQ Composite index bottomed at 1,114.11 on October 9, 2002. This marked the lowest point following its peak of 5,048.62 in March 2000, representing a decline of nearly 80 percent. The index remained at this low level until it recovered to its previous all-time high in March 2015." (BING AI).
My observation is that most investors today have a time horizon about equal the life span of a tsetse-fly. I cannot imagine them sitting on a falling etf, oef, stock or other asset for anything approaching 15 years. Hence, there will be heavy bailing when the next bubble pops. As usual, @FD1000 will have sold and moved to cash the day before.
I would not bet on a bubble bursting in 2026 or any other year. Your odds of picking the correct year are about 1 in 10. Bubbles take years or decades to grow but deflate much faster. I haven't sold everything and run to cash. Sitting at 33% in equities / 10% real assets. Probably age appropriate. But I suspect you're getting "paid to wait" with a lot of assets at this point.
Happy Holidays to all the good folks at MFO,
great points... reminded me of the saying:
"The market climbs the stairs up and then takes the elevator down!"
Israel was attacked from Gaza during Biden’s presidency, resulting in the killing and torture of 1,200 innocent people and triggering major unrest across the Middle East.
The U.S. withdrew from Afghanistan under Biden, leaving 13 American soldiers dead and billions of dollars’ worth of equipment behind.
The southern border was left open, allowing millions of illegal immigrants to enter, including thousands with criminal records.
We also experienced the highest inflation in four decades, causing financial stress and anxiety for millions of people.
Yes, it was a chaotic time.